National Securities Depository Limited (NSDL) is a financial institution established to hold securities like bonds and shares in either physical or dematerialized (non-physical) form. These securities are stored in depository accounts, similar to how money is stored in bank accounts, facilitating swift transfers of ownership via book entries. Although India's capital market has been active for nearly a century, paper-based settlements presented several challenges such as delayed transfer execution and poor delivery. To resolve these issues, the Depositories Act was passed in 1996 and took effect on September 20, 1995.
Securities are tradable financial assets that can be bought and sold in the financial market, including equity, fixed-income securities, equity warrants, common stocks, and others. We will now explore the various benefits of the TIN NSDL portal and the services provided by NSDL. However, let’s first understand the main components of the TIN NSDL portal.
Components of the TIN NSDL Portal
The TIN system consists of two primary subsystems:
- Electronic Return Acceptance and Consolidation System (ERACS)
- Online Tax Accounting System (OLTAS)
ERACS is designed to assist in the preparation of Annual Information Reports, TDS, and TCS, processing taxpayer-provided data and sending it to the Central System. It is a web-based tool for submitting electronic returns of TDS, TCS, and AIR to the central system.
OLTAS, on the other hand, is used by the department to receive information on tax deposits made across India. OLTAS processes tax collected by various tax collection branches and sends it to the Central System for further review by the authorities.
Advantages of NSDL TIN
No Risk of Bad Deliveries
In paper-based transactions, buyers couldn’t inspect the asset’s quality before purchase, creating a risk. The dematerialized format has minimized this risk, ensuring that securities are delivered correctly.
Removal of Risks Associated with Physical Certificates
Physical certificates carry risks such as theft, damage, and destruction. With the depository system, securities are kept in Demat form, eliminating these risks and saving costs on duplicate certificates.
Stamp Duty
Stamp duty was required in the past, but it is no longer needed for transactions involving depository securities, including shares, bonds, and mutual funds.
Instant Transfer and Registration of Securities
In the depository system, securities are legally owned by an investor once credited to their account, in contrast to the physical system, where ownership transfer was delayed by paperwork and transport risks.
Faster Settlements and Improved Liquidity
Settlements occur within two working days after the trading day (T+2 rolling settlement), promoting faster transaction turnover and better liquidity for investors.
Quick Disbursement of Non-Cash Corporate Benefits
NSDL enables direct credits of non-cash corporate benefits like bonus shares and rights issues to investors’ accounts, ensuring speedy and secure transfers without the risk of certificates being lost in transit.
Brokerage Costs
Brokerage costs are reduced as securities are transferred through depositories, minimizing back-office work, brokers’ risks, and paperwork, which results in lower fees for both investors and brokers.
Reduced Paperwork
Online securities transactions cut down on paperwork, making it easier to manage transactions without needing to store large volumes of physical documents.
Status Reports
Investors receive periodic statements with details of their transactions and holdings, allowing better tracking and management.
Easy Updates to Investor Information
Previously, investors had to update each company they were invested in with any personal information changes. Now, they only need to notify their Depository Participants (DPs), and the changes are automatically reflected across all accounts.
Streamlined Transfer Process
Securities in Demat form can be transferred easily by providing relevant documents to DPs, which are then updated across all companies where the investor holds securities.
Simplified Selling Process for Minors
Guardians of minors do not need court approval to sell securities held in Demat form on their behalf.
TIN NSDL PAN Application Procedure
TIN NSDL offers online applications for new PAN issuance as well as for reprints or corrections to existing PAN card information. Here’s a step-by-step guide for applying for a PAN card online.
Step 1: Visit www.onlineservices.nsdl.com and click ‘Apply New PAN Card’ in the top-left corner.
Step 2: A form will appear on the screen for you to fill out.
Step 3: Complete the form with the required details:
Step 4: Select your application type.
Step 5: Choose the category (options include individual, company, trust, government, etc.).
Step 6: Provide your name details.
Step 7: Enter your date of birth.
Step 8: Add your email address.
Step 9: Enter your mobile number.
Services Provided by TIN NSDL
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TAN To file TDS or TCS returns, certificates, or payment challans, a Tax Deduction and Collection Account Number (TAN) is mandatory. The TIN NSDL website offers various services related to TAN, such as online applications for NSDL PAN Card, checking status updates, reprinting TAN letters, requesting duplicate TANs, and more. PAN CARD A Permanent Account Number (PAN) is necessary for all taxpayers, and it must be quoted in numerous transactions. On the TIN NSDL website, individuals and businesses can apply for a PAN Card with just a few clicks. Additional services include tracking the PAN application status, making updates or corrections to an existing PAN, canceling a PAN, and accessing other related information. E-TDS/E-TCS TDS (Tax Deducted at Source) is applicable on payments made by individuals or businesses to third parties, and this tax must be submitted to the authorized tax authorities. The TIN NSDL platform allows businesses and individuals to conveniently upload their TDS returns online. The same process is available for TCS returns. Annual Information Return (AIR) As per the Income Tax Act, all significant transactions must be accompanied by an Annual Information Return. Entities required to file an AIR can do so on the TIN NSDL website, which also offers services like registration, PAN status verification, digital signature renewal, and more.
AIN Registration Certain Account Offices need an Account Office Identification Number (AIN). Such entities can apply for an AIN online, view or download the Book Identification Number (BIN), update their information, and submit Form 24G through the TIN NSDL website. |
Online Tax Payments This platform allows taxpayers to pay their direct taxes online using the relevant forms. Businesses can pay taxes like TDS on property, income tax, corporation tax, wealth tax, excise duties, and other direct taxes securely, all through the website. Tax Refund Status Taxpayers can easily check the status of their tax refunds on the website by entering their PAN details and the relevant assessment year, helping them track how much refund they are entitled to. Online PAN Verification Certain institutions like banks, insurance companies, NBFCs, and credit organizations may need to verify the PAN Card of individuals, which can be done on this platform. These entities can register and follow a simple process to complete the verification. E-Return Intermediary Authorized intermediaries who file income tax returns on behalf of taxpayers can use this service to submit returns online. This service simplifies the process for taxpayers, ensuring a smooth return submission. |
NSDL TIN - Security Measures
Since large sums of money are involved in the execution of transactions at National Securities Depository Limited (NSDL), it is crucial to take necessary precautions to ensure safety. The depository system for investors holding securities is protected with the following measures:
- The Securities and Exchange Board of India (SEBI) employs rigorous procedures to select only reputable firms as depository participants.
- Transaction Logging at Central Server: Every transaction processed by NSDL is recorded on its central server and mirrored in the databases of business partners.
- Control Over Account Entries: Debit or credit entries in client accounts can only be performed after receiving verified instructions from the client.
- Regular Account Statements: Depository participants (DPs) must issue periodic statements to investors to enhance account control.
- Data Protection: All data exchanges between NSDL and its business partners are encrypted using advanced technology.
- Routine Audits: NSDL regularly audits depository participants and Registrar & Transfer (R&T) Agents to ensure compliance.
- Investor Complaints: Business partners are responsible for resolving investor complaints. If unresolved, investors can directly approach NSDL for assistance.
- Insurance Coverage: To protect investors from losses due to errors, omissions, or negligence by DPs, NSDL offers compensation and coverage for such incidents.
- Depository Operations Certification: NSDL has introduced an NCFM certification in depository operations that must be completed by at least one person from each DP branch to ensure proficiency in the depository system.
- High-Quality Computer and Communication Infrastructure: NSDL and its business partners use advanced computer systems and communication infrastructure that comply with industry standards.
- Random Verifications: NSDL performs random checks by sending statements to a sample of investors, who can verify them against those provided by their DPs to spot discrepancies.
- Disaster Recovery: NSDL maintains a disaster recovery system to ensure that data is accessible 24/7, even after natural or man-made disasters. This system mirrors the primary database and takes over if the primary system fails.
- Ongoing Reviews: NSDL conducts periodic reviews of its hardware, software, and network infrastructure to ensure optimal performance and security.